They're the only ones who go. And I left out a weird part.
Someone doesn't even have to have an interest in the loan to buy a CDS.
If you loan AB $100,000 and I didn't think AB could pay it back, I could buy a CDS which would pay me $100,000 if AB defaulted.
Even though I had no interest in the initial transaction.
Let's say, however, that AB defaults and the company which sold me the CDS goes broke and can't cover it.
Technically, I'm eligible for bailout funds. The Feds would pay me the $100,000 AB owes you.
Arf